Dotcom can sue Government

The Government has lost its bid to keep its spy agency out of the Kim Dotcom legal battle, meaning it will have to appear in court and be sued alongside police.

However, a Court of Appeal judgment released today has overturned a decision that would have allowed Dotcom's lawyers to see all the information collected by the Government Communications Security Bureau (GCSB) against him.

In its ruling the court also slammed the Crown for failing to follow proper procedure and has asked them to better co-operate with Dotcom's lawyers so the case can be determined as "expeditiously" as possible.

The judgment was released following an appeal by the attorney-general against a decision made by the chief High Court judge, Justice Helen Winkelmann, last year.

Winkelmann ruled the GCSB needed to be included in the Dotcom proceedings, and that details of the extent of the spying must be made available.

It was revealed the GCSB had been illegally spying on the Megaupload founder prior to his arrest on copyright infringement charges last year.

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Dotcom decided to seek compensation for the breach in addition to his claim against police, who were found to have acted unlawfully during the raid on his Coatesville home.

The attorney-general did not believe the GCSB should be a party to the case. The Appeal Court did not agree and has ordered the two compensation claims to be joined at an April hearing.

Not all of the appeal decision went in Dotcom's favour, however.

The court also ruled that not all of the evidence gathered by the spies about Dotcom and his associate Bram van der Kolk has to be made available to his lawyers.

Previously, Winkelmann had ordered "discovery" of all documents related to the Dotcom operation, including anything shared with other intelligence agencies overseas. However today's Appeal Court ruling means that Dotcom's team are only allowed to know of the existence of the information and to who it was shown, but will not get to see the actual information collected.

Within the judgment, the appeal court judges expressed displeasure at the way the compensation case had been handled by the Crown.

"The dilemma that this court now faces should not have been allowed to develop," it said.

"The Crown should have ensured that the issues brought to this court were in a proper procedural form... especially as the police [claim] is the principal area of contention."

It also added an end comment saying: "We urge the parties to co-operate to ensure that the pleadings are brought into proper order and that the issues before the High Court are determined as expeditiously as possible."